UK mid-value IT market feeling the offshore pinch

Offshoring is eating away at the demand for mid-value IT skills in the UK, a report by IT staffing company ReThink Recruitment has revealed.

Offshoring is eating away at the demand for mid-value IT skills in the UK, a report by IT staffing company ReThink Recruitment has revealed.

The survey showed the proportion of IT jobs created in software development has shrunk 6% over the past year, from 34.3% to 28.5%.

It reflects a growing polarisation of skills, with the UK increasingly specialising in higher paid management and consultancy positions, while countries such as India see the number of technical jobs grow.

The proportion of support roles created - the area generally seen as the most at risk from offshoring - fell from 24% to 21.9% over the same period. But small UK suppliers or teams make software jobs more resilient to offshoring than support roles, because these small companies are less able to benefit from economies of scale by sending work abroad, ensuring there is still some domestic demand for software development skills.

The survey backs up the theory that a global division of labour is emerging in IT.

Demand for consultants in the UK is being partly fuelled by the high level of post-merger and acquisition work, and growing public sector outsourcing requirements. Jon Butterfield, managing director at ReThink Recruitment, said, "Offshoring raises quality control issues, which strengthens demand for project managers in the UK to manage processes."

Butterfield added, "The fear that IT helpdesk jobs simply represented the thin end of the wedge, and that higher value technical roles would be sent offshore next, is not new. But it is now having an impact on the IT jobs market."

But high wage inflation of 15% in India means the business case for offshoring may not be viable for much longer, said Butterfield.

Indian software engineers earn £6,500 a year, compared with £32,000 in the UK, a gap that is likely to close, said Butterfield.

"When wages for software specialists in India reach around 40% of the UK rate and you factor in the cost of maintaining two offices, travel expenses, time differences and so on, the financial case for offshoring begins to unravel. We are not there yet, but in five years we could be," he said.

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